The State of the Loss Prevention Industry: 2011 Update

Mark Doyle is president of loss prevention research and consulting firm Jack Hayes International. He has more than 25 years of experience in the field of loss prevention.

We recently completed our 23rd Annual Retail Theft Survey with 23 major retail companies participating, representing 19,104 stores, with retail sales exceeding $632 billion in 2010. The survey participants were all large retail companies (department stores, mass merchants, big box) who practice true loss prevention strategies, yet they still apprehended over 1 million shoplifters and dishonest employees in 2010, and recovered more than $148 million from those apprehensions.

For the first time in over 10 years, total shoplifter and dishonest employee apprehensions, along with the dollars recovered from those apprehensions all declined from the previous year. While surveyed retailers made almost a million shoplifting apprehensions; apprehended over 69,000 dishonest employees; and recovered over $148 million from these thieves in 2010, these numbers are all down slightly from the previous year. It appears the economy, fewer store employees, and less loss prevention staffing all played a role in these results. While the numbers were down in 2010, these thieves still stole over $7 billion in 2010 from our 23 surveyed retailers.

Below are some of the highlights from our 23rd Annual Retail Theft Survey:

Shoplifting

Apprehensions: 959,903 shoplifters were apprehended in 2010, down 4.1% from 2009.

Recovery Dollars: Over $104 million was recovered from apprehended shoplifters in 2010, a decline 4.7% from 2009.

For the 14th consecutive year, dollars recovered from shoplifters where no apprehension was made ($33 million) increased. In 2010, this increase was an amazing 16.4%.

The average shoplifting case value in 2010 was $108.46, which was a slight decrease of 0.7% over 2009's average case value ($109.21).

Employee Theft

On a per company basis, one out of every 33.2 employees was apprehended for theft from their employer in 2009 (based on comparison data of over 2.8 million employees).

Apprehensions: 69,373 dishonest employees were apprehended in 2010, down 0.4% from 2009.

Recovery Dollars: Over $44 million was recovered from employee apprehensions in 2010, down 12.7% from 2009.

On a per case average, dishonest employees steal almost six times the amount stolen by shoplifters ($639.99 vs $108.46).

The average dishonest employee case value in 2019 was $639.99, a 12.3% decrease over 2009's average case value ($730.04).

NEXT: Reasons behind the numbers

We asked our survey participants what they thought was the cause(s) behind the decrease in shoplifting apprehensions and recovery dollars in 2010 and they attributed the following factors to increased shoplifting activity:

Less LP staffing/labor

More focus on 'quality' instead of quantity apprehensions

Policy change on SL apprehensions

Less stores

More focus on internal theft cases

We also asked or survey participants what they thought was the cause(s) behind the decrease in employee theft apprehensions and recovery dollars in 2010, and they contributed the following to decreased employee theft activity:

Less turnover and fewer overall employees

Fewer new hires and seasonal employees

Less LP staffing/labor

Better/enhanced pre-employment screening

Better LP training and awareness

With shoplifting continuing to be a major problem for many retailers, companies need to be more proactive with their anti-shoplifting program. Areas companies can focus on to reduce their shoplifting losses include:

Customer Service: The best deterrent to shoplifting is good old customer service. Shoplifters want and need privacy to commit their theft acts; good customer service takes that away from them. If a customer states they are "just looking", tell them you will "keep your eye on them" in case they need any assistance.

Training & Awareness: Both new-hires and current employees need continuous training on shoplifting prevention and what to do if they observe someone shoplifting.

Physical Security Deterrents: If you have a shoplifting problem, physical security deterrents such as EAS (electronic article surveillance) systems and CCTV video surveillance work when they are managed properly.

Source Tagging: Continue to pursue EAS source tagging of high value and highly desirable items with vendors and manufacturers.

Fight ORC: Work with state and national retail trade associations for legislation to combat organized retail crime (ORC).

While dishonest employee apprehensions and recovery dollars were down in 2010, this area continues to be a major drain on many retailers' bottom-line profits. Areas companies can focus on to reduce their vulnerability to employee theft include:

Pre-Employment Screening Process: The first step to controlling employee theft starts at the point-of-hire; do not hire the "bad apple". A thorough pre-employment screening process including, reference checks, "honesty testing", SSN trace/verification, criminal background checks and drug testing is most important. Money spent up-front in the screening process to identify 'quality' employees will result in savings from reduced turnover and losses.

POS Exception Monitoring: Use a POS exception based monitoring program to quickly identify possible fraudulent transactions at the point of sale.

Auditing: Ensure consistent compliance to company policies and procedures by conducting loss prevention/shrinkage control audits on a regular basis. By reducing the opportunity, you reduce the chance of theft or loss.

Training and Awareness: Invest in loss prevention training and awareness programs for all employees and institute a reward program for employees who report dishonest activities.

In summary, retail theft (shoplifting and dishonest employees) continues to be a much greater problem than many people realize, which forces higher prices on the consumer, and stores or even companies to close due to the profit drain from these losses.

NEXT: The data behind the 23rd annual report

SURVEY PARTICIPANTS

23 Large Retail Companies

19,104 Stores (representing an excellent cross-section of the United States)

$632,932,131,559 in Annual Retail Sales (2010)

TOTAL RETAIL THEFT APPREHENSIONS

Difference

2009

2010

#/$

Pct.

Apprehensions

1,070,406

1,029,276

-41,130

-3.84%

Recoveries

$160,116,386

$148,505,669

-$11,610,717

-7.25%

Avg. Case Value

$149.58

$144.28

-$5.30

-3.55%

SHOPLIFTING

Difference

2009

2010

#/$

Pct.

Apprehensions

1,000,787

959,903

-40,884

-4.09%

Recoveries

$109,291,669

$104,107,917

-$5,183,752

-4.74%

Avg. Case Value

$109.21

$108.46

-$0.75

-0.69%

Hours Per Apprehension (11 co's reporting)

44.13

52.96

20.01%

Recoveries
(No Apprehension Made)

$28,993,230

$33,741,685

$4,748,455

16.38%

DISHONEST EMPLOYEES

Difference

2009

2010

#/$

Pct.

Apprehensions

69,619

69,373

-246

-0.35%

Recoveries

$50,824,717

$44,397,752

-$6,426,965

-12.65%

Avg. Case Value

$730.04

$639.99

-$90.05

-12.34%

About the author: Mark R. Doyle is president of Jack L. Hayes International Inc., and has over 25 years experience in the loss prevention field. He has consulted with some of the finest retail, wholesale and manufacturing companies in the world. Hayes International Inc. has been in the loss prevention/shrinkage control consulting business for over 30 years, and is recognized on an international level as the foremost loss prevention and inventory shrinkage control consulting firm in the world.